Megaworld-sponsored MREIT is planning to grow its office assets size to 1 million square meters within the next five to ten years as it aims to be the ‘country’s fastest growing REIT with the longest expansion pipeline’ amongst listed REITs on the Philippine Stock Exchange.
Next year, MREIT’s sponsor is planning to inject an additional 100,000 square meters of prime office assets that will increase MREIT’s portfolio to around 324,000 square meters by end-2022.
“We are committed to reaching half a million square meters by 2024, and are highly confident of our ability to reach 1 million square meters in the near future so that we can be the largest office REIT in Southeast Asia. Our goal is to put the Philippines and MREIT on the global REIT map because of the size and quality of our REIT portfolio and our world-class tenant base. We believe we can easily achieve this because Megaworld already has 1.2 million square meters of existing office buildings and has a robust pipeline of new office development spread across 26 business parks across the country. We remain bullish about the prospects of the Philippine BPO sector and Megaworld expects to maintain its undisputed leadership position as the Philippine office landlord of choice for the world’s leading IT and BPO companies”, says Kevin L. Tan, President and CEO, MREIT, Inc.MREITs initial portfolio of approximately 224,431 square meters consists of 10 prime office buildings in three of Megaworld’s most established township locations that are popular amongst the biggest BPO companies operating in the Philippines.
These include 1800 Eastwood Avenue, 1880 East Avenue, E-commerce Plaza, One World Square, Two World Square, Three World Square, 8/10 Upper McKinley Building, 18/20 Upper McKinley Building, One Techno Place Iloilo, Richmonde Tower and Richmonde Hotel Iloilo.
“Our current portfolio has been carefully curated to include only Grade A PEZA-accredited buildings with mainly BPO and multinational tenants. MREIT’s strategy is to be very focused on high quality office buildings with high quality tenants that are located inside an already established township. Throughout the years, our integrated live-work-play townships has proven to be successful in attracting better and stickier tenants, which in turn translates to significantly less tenant churn, consistently higher occupancy rates and sustainable escalating rental rates,” explains Mr. Tan.
MREIT’s initial public offering price was set at P16.10 per share, which translates to a projected FY2022 (ending June 30, 2022) dividend yield of 5.7%.
“This IPO was priced at an attractive level to provide IPO investors a compelling entry opportunity to become long term partners in MREIT’s goal of becoming the Philippines’ fastest growing REIT backed by the country’s largest office landlord. As a result, the institutional book building attracted strong interest from both long only foreign investors as well as domestic institutional investors,” says Ed Francisco, President, BDO Capital, who was one of the joint global coordinators on the IPO.
The estimated net IPO proceeds (assuming full exercise of the over-allotment option) of c.P14.7bn together with the expected cash proceeds from the impending asset injection into MREIT by its sponsor, Megaworld, will be reinvested by Megaworld into 15 projects over the next 12 months. These Megaworld projects are expected to significantly contribute to nation-building and job creation all over the country. Assuming full exercise of the over-allotment option, Megaworld will continue to own approximately a 62.1% stake in MREIT post-IPO.
“We only see this as the beginning of a very long growth runway. We thank investors for their trust and confidence in supporting our IPO. We are excited about the opportunity to grow and create value for our Sponsor, our investors and for the country”, concludes Mr. Tan.